ESCROW AGREEMENT dated as of July 30, 1999 (the "Escrow
Agreement") among Vicon Industries, Inc., a New York corporation ("Purchaser"),
Isaac Gershoni ("Seller"), and European American Bank, a New York banking
corporation (the "Escrow Agent").
W I T N E S S E T H:
WHEREAS, Purchaser and Seller have entered into a Stock
Purchase Agreement dated as of July 3028, 1999 (the "Stock Purchase Agreement"),
providing for the sale by Seller to Purchaser of all of the shares of TeleSite
U.S.A., Inc.; and
WHEREAS, Seller has agreed that Purchaser shall deposit with
the Escrow Agent a portion of the Purchase Price (as defined in the Purchase
Agreement) with the Escrow Agent;
NOW, THEREFORE, the parties agree as follows:
1. Creation of Escrow and Deposit of Escrow Amount.
Purchaser herewith deposits with the Escrow Agent the amount of $1,000,000.00
(such amount, including all income and interest thereon, is hereinafter referred
to as the "Escrow Amount"). The Escrow Agent hereby acknowledges the receipt of
the Escrow Amount hereby deposited, and the Escrow Agent agrees to hold the
Escrow Amount for the purposes and upon the terms and conditions hereinafter set
forth.
2. Distribution of Escrow Amount.
A. Escrow Agent shall make the following
distributions from the Escrow Amount to Purchaser:
(i) within 15 days after the first
anniversary hereof, 100% of all interest earned prior to such anniversary
(ii) within 15 days after the second
anniversary hereof, 66_% of all interest earned between the first and second
anniversaries; and
(iii) within 15 days after the third
anniversary hereof, 33_% of all interest earned between the second and third
anniversaries.
B. Within 10 days after the third anniversary of this
Agreement, the Escrow Agent shall distribute the balance of the Escrow
Amount to Seller, or such payee(s) in the United States as Seller may designate
by written notice to the Escrow Agent unless prior to such third anniversary,
Escrow Agent shall have received from Purchaser a notice of claim as provided in
section 3.
C. If prior to such third anniversary, the Escrow
Agent shall have received such a notice of claim, the Escrow Agent shall
continue to retain from the Escrow Amount the aggregate sum specified in such
notice of claim, and the excess, if any, shall be paid as provided in section
2B.
D. Amounts retained pursuant to section 2C shall
continue to be held in escrow under this Agreement and shall be distributed
only in accordance with (a) an instruction signed and notarized by Purchaser and
Seller and delivered to the Escrow Agent, or (b) an arbitration award pursuant
to section 22 of the Stock Purchase Agreement, a copy of which award shall have
been delivered to the Escrow Agent, together with a certificate signed by the
party presenting such award and an opinion of such party's counsel satisfactory
to Escrow Agent, each stating that such award was made pursuant to such section
and is in full force and effect.
E. In no event shall the aggregate amount of
disbursements made by the Escrow Agreement exceed the actual amount of the
Escrow Amount.
3. Notice of Claim.
If Purchaser in good faith believes that it has any
claim for indemnification or damages against Seller under or relating to
the Stock Purchase Agreement or the transactions contemplated thereby, Purchaser
may deliver to the Escrow Agent a notice of such claim. Such notice shall
specify the nature of the claim and the amount thereof and shall be signed by
Purchaser.
4. Escrow Investments. The Escrow Agent shall invest the
Escrow Amount, and any income and interest thereon and on reinvested income and
interest, by (i) depositing such amounts in interest bearing certificates of
deposit with the Escrow Agent, having maturities of 12 months or less or (ii)
purchasing obligations of the United States of America, or any instrumentality
thereof and fully guaranteed thereby, having maturities of 12 months or less. In
connection with making any distributions pursuant to this Escrow Agreement, the
Escrow Agent may sell, liquidate or dispose of such investments as it deems
necessary to make such distributions.
5. Compensation, Expenses and Liability of the Escrow Agent.
(a) The Escrow Agent shall be entitled to receive reasonable
compensation for its services hereunder as set forth in Schedule A. The
compensation and expenses of the Escrow Agent, and the fees and expenses
incurred in connection with maintaining the escrow, shall be borne 50% by
Purchaser and 50% by Seller in advance of the date on which such payments shall
be due to the Escrow Agent. The Escrow Agent may deduct any amount to which
Seller or Purchaser may be entitled under this Escrow Agreement any unpaid fees,
compensation or expenses of the Escrow Agent for which Seller or Purchaser is,
as the case may be, liable under this Section 5.
(b) The Escrow Agent shall not be liable for any action taken
by it in good faith and believed by it to be authorized or within the
discretion, rights or powers conferred upon it by this Escrow Agreement, and the
Escrow Agent may rely and shall be protected in acting or refraining from acting
in reliance upon the opinion of counsel or upon any certificate, request or
other document believed by it to be genuine and to have been signed or presented
by the proper party or parties. The Escrow Agent shall not be obligated to make
any inquiry as to the authority, capacity, existence, or identity of any person
purporting to give any such certificate, request or other document. If the
Escrow Agent shall become involved in any litigation by which Seller shall
contest any claim by Purchaser against the Escrow Amount, the Escrow Agent is
authorized to comply with any final order or decree duly entered by any court of
competent jurisdiction in any such litigation. Purchaser and Seller agree to
indemnify the Escrow Agent against, and to hold the Escrow Agent harmless from,
any and all loss, damage or liability, and all expenses (including without
limitation legal fees), except to the extent arising out of the gross negligence
or willful misconduct of the Escrow Agent, incurred by the Escrow Agent arising
out of or in connection with the execution, delivery or performance by the
Escrow Agent of this Escrow Agreement. The Escrow Agent shall not be liable for
any investment losses resulting from the investment, reinvestment, sale or
liquidation of any portion of the Escrow Account, within the agreed upon
investments as referred to in Section 4, "Escrow Investments."
6. Resignation of the Escrow Agent. The Escrow Agent may
resign and may be discharged from any further duties or obligations hereunder by
giving at least 30 days prior written notice of such resignation to Purchaser
and Seller. On the effective date of such resignation, the Escrow Agent shall
pay the Escrow Amount to such successor escrow agent as Purchaser and Seller
shall have designated in a notice delivered to Escrow Agent or, in the absence
of such notice, to the Clerk's Office of the United States District Court of the
Eastern District of New York or of the New York State Supreme Court for Suffolk
County.
7. Notices. All notices or other communications which are
required or permitted hereunder shall be in writing and sufficient if delivered
personally or sent by registered or certified mail, postage prepaid, addressed
as follows:
If to Seller, at:
Mr. Isaac Gershoni
97 Taylor Drive
Closter, New Jersey 07624
Tel: (201) 568-5050
Fax: (201) 568-6444
with a copy to:
Mark Eliott Gold, Esq.
19 Phelps Avenue
Tenafly, New Jersey 07670
Tel: (201) 227-1830
Fax: (201) 227-1831
If to Purchaser, to:
Vicon Industries, Inc.
89 Arkay Drive
Hauppauge, New York 11788
Attention: Kenneth M. Darby
President
Tel: (516) 952-2288
Fax: (516) 951-2288
with a copy to:
Schoeman, Updike & Kaufman, LLP
60 East 42nd Street
39th Floor
New York, New York 10165
Attention: Michael E. Schoeman, Esq.
Tel: (212) 661-5030
Fax: (212) 687-2123
If to Escrow Agent:
European American Bank
150 Motor Parkway
Hauppauge, New York 11788
Attention: Branch Manager
with a copy to:
European American Bank
730 Veterans Memorial Highway
Hauppauge, New York 11788
Attention: Stuart N. Berman
Any party may by notice change the address to which notice or other
communications to it are to be delivered or mailed.
8. Governing Law. This Escrow Agreement shall be governed by
and construed in accordance with the laws of the State of New York exclusive of
its choice of law provisions.
9. Waivers and Amendments. Any term or provision of this
Escrow Agreement may be waived at any time by the party which is entitled to the
benefits thereof, and any term or provision of this Escrow Agreement may be
amended or supplemented at any time by the mutual consent of the parties hereto,
except that any waiver of any term or condition, or any amendment or
supplementation, of this Escrow Agreement must be in writing. A waiver of any
breach or failure to enforce any of the terms or conditions of this Escrow
Agreement shall not in any way affect, limit or waive a party's right hereunder
at any time to enforce strict compliance thereafter with every term or condition
of this Escrow Agreement.
10. Descriptive Headings. The descriptive headings of this
Escrow Agreement are for convenience only and shall not control or affect the
meaning or construction of any provision of this Escrow Agreement.
11. Entire Agreement. This Escrow Agreement contains the
entire agreement among Purchaser, Seller and the Escrow Agent with respect to
the transactions contemplated by this Escrow Agreement and supersedes all prior
arrangements or understandings with respect thereto.
12. Counterparts. This Escrow Agreement may be executed in any
number of counterparts, and each such counterpart hereof shall be deemed to be
an original instrument, but all such counterparts together shall constitute but
one agreement.
13. Illegality. In the event that any one or more of the
provisions contained in this Escrow Agreement shall be determined to be invalid,
illegal or unenforceable in any respect for any reason, the validity, legality
and enforceability of any such provision in any other respect and the remaining
provisions of this Escrow Agreement shall not, at the election of the party for
whom the benefit of the provision exists, be in any way impaired.
IN WITNESS WHEREOF, the undersigned have caused this Escrow
Agreement to be executed on their behalf as of the date first above written.
VICON INDUSTRIES, INC.
By:
Kenneth M. Darby
President
Isaac Gershoni
EUROPEAN AMERICAN BANK
as Escrow Agent
By: